Journal Article

Learning and Information Aggregation in an Exit Game

Pauli Murto and Juuso Välimäki

in The Review of Economic Studies

Published on behalf of Review of Economic Studies Ltd

Volume 78, issue 4, pages 1426-1461
Published in print October 2011 | ISSN: 0034-6527
Published online May 2011 | e-ISSN: 1467-937X | DOI: http://dx.doi.org/10.1093/restud/rdr007
Learning and Information Aggregation in an Exit Game

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  • Game Theory and Bargaining Theory
  • Information, Knowledge, and Uncertainy

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We analyse information aggregation in a stopping game with uncertain pay-offs that are correlated across players. Players learn from their own private experiences as well as by observing the actions of other players. We give a full characterization of the symmetric mixed strategy equilibrium, and show that information aggregates in randomly occurring exit waves. Observational learning induces the players to stay in the game longer. The equilibria display aggregate randomness even for large numbers of players.

Keywords: Learning; Optimal stopping; Dynamic games; C73; D81; D82; D83

Journal Article.  15089 words. 

Subjects: Game Theory and Bargaining Theory ; Information, Knowledge, and Uncertainy

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